Yeh, nah. John Howard wanted GST to apply to all goods and services. Financial services were exempted early in the game. Then the Democrats negotiated exemptions for some of life’s necessities. The argument is that the less well-off spend a greater proportion of their income on necessities, so taxing those necessities hits them disproportionately. In other words, indiscriminate taxation is regressive.

Given indiscriminate taxation, the progressive way would be to provide necessities at no charge to any individual or family with a gross (before tax and deductions) income below the national average. GST being hypothecated to the states, they’d probably claim their share from gross GST (before deducting the cost of necessities for the less well-off), not the net. The effective transfer of revenue from the Commonwealth to the states might be a good thing, but that’s a different issue.

jedb:

Efficiency.

That’s neoliberal for cheap. One of the selling points for GST was that it’s “cost-effective”. In reality, GST increased the number of points of taxation (transactions upon which tax is levied) by orders of magnitude (compared to the old Sales Tax). Administration costs moved from the public service to the private sector and probably increased.

The only positive thing about GST is that the requirement to lodge Business Activity Statements made small businesses update their accounts more regularly. It’s surprising how many business-people found that their enterprises weren’t sustainable. The GST got the blame, but I reckon the early warnings prevented a good many insolvencies.

Yeh, nah. John Howard wanted GST to apply to all goods and services. Financial services were exempted early in the game. Then the Democrats negotiated exemptions for some of life’s necessities. The argument is that the less well-off spend a greater proportion of their income on necessities, so taxing those necessities hits them disproportionately. In other words, indiscriminate taxation is regressive.

Yes, I’m well aware that the GST is inherently regressive. But that argument fails when considering the rest of the tax/welfare system. Even if getting rid of the exemptions caused purchasing power of those with low income to drop significantly (something I’m skeptical of) then that just means our UBI/NIT policy would need to be adjusted slightly.

davidb:

Given indiscriminate taxation, the progressive way would be to provide necessities at no charge to any individual or family with a gross (before tax and deductions) income below the national average.

Otherwise going full-on with exemptions you get this. What you have just described is approaching cashless welfare cards and similar from the other side. Prescriptive “we know best what necessities you need and are allowed to have” mentality.

davidb:

That’s neoliberal for cheap. One of the selling points for GST was that it’s “cost-effective”. In reality, GST increased the number of points of taxation (transactions upon which tax is levied) by orders of magnitude (compared to the old Sales Tax). Administration costs moved from the public service to the private sector and probably increased.

This ties into my third point. Arguments about whether or not we should have the GST at all are something I think would be much more productive than smaller fights over specific exemptions.

The point I’m trying to make is that if there are any major beneficial changes to make in this area, they aren’t going to happen while the focus is on exemptions. So anything that can deal with all possible exemption issues at once would be a good thing.

If we removed GST, what would you recommend replacing it with, and why would that be fairer?

Interesting question. As has been pointed out, GST hits hardest those who have the least discretionary income. From that perspective, it would be difficult to come up with anything less fair. The exemptions negotiated by the Democrats knocked off some of the rough edges, but it’s still a mongrel of a tax.

When GST was introduced, I was working in the ATO. My area of expertise was Sales Tax. That was a complex field, in part because of efforts to be fair (also because of lobbying and jerrymandering, but that’s a different issue).

In hypothecating GST revenue to the states, John Howard effectively nobbled any attempt to modify, let alone eliminate it. Every state would have to agree. For that reason, I hold little hope of removing GST from anything.

In a world in which we could eliminate GST, I’d replace the revenue with taxes on non-essentials and luxuries. Then I’d go after business: turnover, assets and transactions spring to mind.

As has been pointed out, GST hits hardest those who have the least discretionary income.

How is that true?
GST doesn’t apply to rent, basic foods, medicines, education etc. The basic necessities, representing the bulk of the expenses of the poorest people.
Meanwhile, the people with a lot of disposable income will be copping GST on most things they buy.

I have no problem with GST not applying to menstrual sanitation products.

Yet it does and, given the breadth of necessary agreement, that’s not likely to change.

Broad-based consumption taxes are regressive by nature. That’s why Conservatives love them so. Exemptions can go some way toward reducing that shortcoming, but it can’t realistically be eliminated. A narrowly-based (ie. inclusive rather than exclusive) tax may be less regressive, depending on what’s included in the tax base.

I suggest that PPAU should support the current efforts to make menstrual sanitation products (pads, tampons, cups) exempt from GST.

Absolutely!

This is one of those necessities which Aunty Meg really should have included when she was busy trading the half of the Party’s platform I cared about for the half I didn’t GAF about.

I still wonder why she didn’t and I suspect age may have been a factor, she may have forgotten its import by that point in her life and she certainly wasn’t taking advice from Natasha back then.

Ah, thought of that deal almost makes me nostalgic … except that was the deal that resulted in my parting ways with the Democrats. Which means I managed to avoid the misogynistic coup d’etat and subsequent implosion.